Stark and donations of HIT: A users guide

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In August 2006 the Department of Health and Human Services announced regulatory changes that permit otherwise impermissible donations of e-prescribing and EHR technology to physicians and other providers.

The changes are designed to help eliminate HIT adoption cost barriers and facilitate more widespread adoption of HIT. While the government touts the changes as relief it may be difficult for healthcare providers to apply the changes and donate HIT, says Claudia Schlosberg, partner with Blank, Rome (Washington, D.C.).

The regulatory updates relate to the Stark Law and Anti-kickback statute and establish separate rules for e-prescribing and EHR donations.

Stark and Anti-Kickback at a glance

The Stark Law addresses physician referral relationships and prohibits physicians from referring designated Medicare-payable health services to an entity in which he or a family member has a financial relationship. The broader Anti-Kickback Statute establishes criminal penalties for parties that participate in inducements for the referral of business reimbursable by federal healthcare programs.

Stark includes exceptions that allow physicians to avoid penalties, and Anti-Kickback incorporates voluntary safe harbors that allow practices to demonstrate that they have not violated the law.

Healthcare providers need to understand the regulatory changes related to HIT donations, the Stark Law and Anti-Kickback Statute, says Schlosberg.

Donations of HIT relate to Stark by establishing the financial relationship between the hospital and physician unless the donation meets an exception. Under Anti-Kickback a donation may constitute an inducement unless it meets Safe Harbor.

Exceptions offer limited utility

The e-prescribing exception and Safe Harbor covers items and services necessary and used solely to transmit and receive e-prescription information. This includes hardware, software, internet connectivity and training support. The problem, says Schlosberg, is that few items serve a single purpose.
EHR exceptions and Safe Harbor covers interoperable software necessary and used predominately to create, maintain, transmit and receive EHR. This rule will have more utility than the e-prescribing rule because use is not restricted solely to the EHR, predicts Schlosberg.
Stark exceptions protect hospitals, medical staff and physicians while Anti-kickback Safe Harbor provides broader protection to an individual or entity providing services covered by a federal health care program. Anti-Kickback Safe Harbor does not apply to pharmaceutical and device vendors.

Challenges and roadblocks

The new regulations incorporate numerous restrictions that complicate implementation. For example, donors cannot choose recipients based on volume; limit the use, compatibility or interoperability of donated HIT or restrict use to patients based on payor status. On the recipient side, the physician cannot make the donation a condition of doing business. Another stumbling block on the EHR front is that the physician must pay 15 percent of the cost of the donation.

Physicians and donors must determine if an HIT donation meets business and practice needs, says Schlosberg. In addition, donors and recipients must evaluate each arrangement to determine that it complies with Stark and Anti-Kickback Safe Harbor.